JAKARTA: The normalization over several regulations post 2008 global crisis continues to spark. Bank Indonesia again limits the short-term foreign banking loan by 30% from the previous unlimited level.Such regulation included in the Bank Indonesia Regulation (PBI) No. 13/7/PBI 2011 on foreign bank loan. The regulation takes into effect on 28 January 2011.Head of Public Relation Bureau of Bank Indonesia, Difi A. Johansyah said that policy re-imposition on the daily balance amount of short term foreign loan happens to be a normalization of the previous policy.The regulation shifts from the loose monetary policy into normalization then leads into tightening in terms of quantity, he said to Bisnis yesterday.He explained that the limitation of the daily short-term foreign bank loan, reaching 30% of the capital, was once revoked as a responsive policy to anticipate the impact of the global crisis. The turmoil was triggered by Lehman Brothers bankruptcy.The crisis took place since there was a massive outflow that caused a tightening over the domestic and banking forex liquidity. However, as the inflow continues to rise up until now, the bank's forex liquidity significantly surges.One of the causes of the rising banking forex liquidity is the short-term foreign banking loan, including checking account (vostro) and other short-term financial instruments.Thus, the government needs to limit the short term foreign loan policy merely to impose prudence, encourage long-term foreign loan as well as support the establishment of macro and financial system stability.With this regulation, foreign investors cannot freely allocate its funds in the domestic banks, if it surpasses 30% of banks capital, then bank shall decline it.However, Bank Indonesia still gives an exception over the maximum calculation for the short-term foreign loan of controlling shareholders merely to overcome the liquidity difficulties and the credit disbursement to real sector.Besides, the operating funds of the foreign banks in Indonesia are also limited as much as 100% (at the most) of the declared operating fund, savings of the foreign country representatives, international institutions, and the current accounts of the non-Indonesian citizens used for an investment activities in Indonesia.Besides, investment instruments, such as direct inclusion, the purchasing of corporate stocks or bonds and government bonds, are also freed from such regulation. (T02/NOM)
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